PTCL Gets Clearance to Participate in DTH License Auction Through a Front Company

PTCL, through a subsidiary company, has gotten the clearance to participate in the upcoming DTH license auction in Pakistan.

The telecom company’s application was previously rejected by PEMRA on various grounds. However, the Islamabad High Court (IHC) has accepted the plea of “SMART SKY”, a subsidiary of Pakistan Telecommunication Company Limited (PTCL), to be allowed to participate in the DTH Licenses bidding, according to a senior official of PTCL who confirmed the news to ProPakistani.

Previously, SMART SKY, after getting rejected, had submitted before the high court that PEMRA recently issued an invitation for companies registered in Pakistan to apply and bid for three non-exclusive DTH Distribution Services Licenses (‘DTH License’) for the territory of Pakistan.

SMART SKY Limited is a private limited company that’s a wholly owned subsidiary of PTCL

SMART SKY along with nine other companies, applied in response to the initiation for DTH Licenses. SMART SKY submitted its detailed application to PEMRA on Oct 5th, 2015, along with all requisite information and documents.

Also Read: 8 Companies to Bid Next Week for 3 DTH Licenses in Pakistan

According to the petition submitted in high court:

On Nov 29th, 2015 — just a week before the auction — we received a letter from PEMRA that SMART SKY had been found ineligible for participating in the bidding process for the grant of DTH License in view of Section 25 of the PEMRA Ordinance. PEMRA in the said letter simply communicated its determination as to the SMART SKY’s ineligibility without providing any hearing opportunity before taking its decision.

The plea argued that PEMRA erroneously applied Section 25(c) of the PEMRA Ordinance 2002 to SMART SKY.

Smart Sky’s petition explained that section 25(c) provides for two restrictive instances, whose majority shares are owned or controlled by foreign nationals or companies. The SMART SKY’s majority shareholder is PTCL, which is a Pakistani company hence SMART SKY does not fall afoul of the first part of Section 25(c). The second being a company whose management or control is vested in foreign nationals or (foreign) companies.

Also Read: PEMRA Postpones DTH License Auction

The petition further stated that the Board of Directors of the SMART SKY, as well as the Chief Executive Officer of the SMART SKY, are all Pakistani nationals and not foreign nationals. Nor there is any a shareholder or management agreement in existence that vests management of SMART SKY in any foreign company.

“Therefore, in strict terms the SMART SKY does not fall within the mischief of Section 25(c) of the PEMRA Ordinance 2002 and hence the decision is without any legal basis,” said the plea.

The second tier of ownership or control of an applicant company is irrelevant to the restrictive provisions of Section 25 of the PEMRA Ordinance 2002. This is important considering that Etisalat is a minority shareholder in PTCL, a Pakistani company with the majority of its shares owned by the Government of Pakistan.

The petition also reminded that PEMRA has previously granted PTCL, the shareholder of SMART SKY, an exemption from the restrictions under Section 25(c) when PTCL directly applied for a media license (IPTV License) which was then granted by PEMRA in 2006. Therefore, PEMRA can not now claim restriction under Section 25(c) to apply upon SMART SKY on account of PTCL being its shareholder.

After IHC’s acceptance, now Smart Sky will be participating in the auction, which was scheduled for Today (Dec 7th, 2015) but was delayed by PEMRA Chairman just three days ahead of auction.